Announcement
HALFYR: CEN: Contact Energy FY22 Interim Result
08:30am
CEN
14/02/2022 08:30
HALFYR
PRICE SENSITIVE
REL: 0830 HRS Contact Energy Limited
HALFYR: CEN: Contact Energy FY22 Interim Result
14 February 2022
Strong performance underpins Contact's ramp-up of investment in NZ's
decarbonisation
[See table in attached announcement]
Highlights
o Solid financial performance, with operating earnings and profit up off the
back of strong hydro generation and increased sales to fuel-constrained
competitors;
o Decarbonisation-driven investments ramping up, supported by long-term power
purchase agreements;
o Good progress on the Tauhara geothermal project despite COVID19-related
headwinds, with the power station's expected capacity upgraded to 168MW, and
the potential Tauhara geothermal field output upgraded by a further 0.2TWh
p.a.;
o Applications lodged for an extension of geothermal consents at Wairakei
post-2026 and a potential 50MW geothermal power station at Te Huka in the
Taupo region;
o Secured land access rights for ~600MW of wind projects across New Zealand
through our exclusive relationship with wind generation experts Roaring40s;
o Intention to invest a further $37m into a new afforestation partnership to
support further carbon capture through tree planting;
o Launched 'It's good to be home' brand campaign, with new 'Good Nights'
pricing plan resonating with customers; total connections increased by 29,000
in the first half of FY22;
o Interim cash dividend of 14 cents per share will be paid on 30 March 2022.
New Zealand renewable energy company Contact Energy ('Contact') released its
interim financial results for the six months to 31 December 2021 today.
Contact CEO Mike Fuge said the company had delivered a "solid financial
performance" in the first half of the FY22 financial year and was investing
in line with its strategy to lead New Zealand's decarbonisation efforts.
Financial performance
Contact reported a statutory profit of $134m, up 72 per cent ($56m) on the
same period last year. Operating earnings (EBITDAF) increased by $76m to
$322m, up 31 per cent on the prior year. Operating free cash flow for the
period decreased from $157m to $131m in the first six months of FY22, down 17
per cent year-on-year.
Mr Fuge said: "It's very pleasing to provide investors with a solid financial
report card. We've seen double-digit growth in our operating earnings and
profit off the back of a period of strong hydro generation.
"While operating free cash flow is lower year-on-year, this is a feature of
our generation asset mix. When it rains, operating earnings increase as we
don't have to run more expensive thermal generation, but cash flow is
impacted as we store the gas we purchased for use in the future.
"We've also progressed a range of renewable energy projects across New
Zealand and our retail business has continued to build market share in
electricity and broadband."
The Board has approved an interim dividend of 14 cents per share and this
will be imputed up to 10 cents per share for qualifying shareholders and paid
on 30 March 2022.
Demand
In line with Contact's decarbonisation focus, Mr Fuge said there had been
strong demand for renewable electricity from forward-thinking customers.
"We're delighted to have secured long-term power purchase agreements with Oji
Fibre, Pan Pac, Genesis Energy and Foodstuffs. Long-term contracts underpin
sustainable operations, support additional renewable generation development,
and can also displace thermal generation. These agreements will reduce carbon
emissions and help keep electricity prices down over the long-term."
The Southern Green Hydrogen project to investigate the world's first
large-scale green hydrogen plant in Southland with Meridian Energy is also
progressing well. Potential development partners have been shortlisted and
are engaged in a formal 'request for proposal' process.
Rio Tinto has recently indicated a desire to continue operating its unique
low carbon smelter at Tiwai Point beyond 2024, when the current electricity
supply contract concludes.
"It's early days, but we are encouraged that the smelter's owner recognises
it needs to play a larger role to help manage dry year security of supply in
New Zealand's electricity system," Mr Fuge said. "In turn, this will lower
system carbon emissions and enable the development of more renewable
generation, which is positive for New Zealand."
Renewable development
On the renewable development front, the Tauhara power station's expected
capacity has recently been upgraded from 152MW to 168MW. It is now expected
to be completed in the second half of 2023, with an increase in the estimated
costs of the project.
"We have encountered some COVID19-related headwinds, but overall the project
remains on track. It will be a world-class renewable development that will be
a foundation for New Zealand's increased renewable electricity needs over the
next decade," Mr Fuge said.
Consent applications have also been lodged with the Waikato Regional Council
for an extension of the geothermal consents at Wairakei post-2026, and land
use consents have been lodged for a new 50MW geothermal power station
development at Te Huka, near Taupo.
Contact has also secured land access rights to build up to 600MW of wind
projects across New Zealand, via its exclusive relationship with wind
generation experts Roaring40s. And separately, an investigation is under way
into the economics of a 100MW battery energy storage system investment.
Retail
Mr Fuge said there were encouraging results from Contact's retail business
over the first half of the FY22 year. "We've seen total connections increase
by 29,000 across electricity and broadband. A new time-of-use plan, 'Good
Nights', was launched and has proven very popular with customers who are keen
to have three hours of free power every night from 9pm."
A new brand campaign launched in January, focused on the idea that 'home is
the best place in the world', provides Contact with a platform to grow its
commitments to the community, environment, and people.
Outlook
Looking ahead, Mr Fuge said Contact was committed to leading the
decarbonisation of New Zealand. "We are excited about the critical role that
Contact's renewable electricity generation is set to play in the
decarbonisation of the New Zealand economy over the next decade."
-ends-
MORE INFORMATION
1/ Enquiries
Investors
Matt Forbes, matthew.forbes@contactenergy.co.nz, +64 21 072 8578
Media
Leah Chamberlin-Gunn, leah.chamberlin-gunn@contactenergy.co.nz, Ph +64 21
2277991
2/ Conference call
A conference call to support the interim results announcement will be held at
10am, NZ time on 14 February 2022.
If you would like to attend the live presentation, please see the details
below to view the webcast off your chosen device:
Click here to enter the webcast: LIVE EVENT LINK
Or access this link via our website:
https://contact.co.nz/aboutus/investor-centre
End CA:00387202 For:CEN Type:HALFYR Time:2022-02-14 08:30:36
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